Betting slips are a business expense, win or lose: court

OSAKA – In a landmark decision, the Osaka District Court ruled Thursday that betting slips for horse races can be counted as a business expense, a finding that could alter rulings on other tax evasion cases related to gambling.

The decision was handed down in the case of a 39-year-old man in Osaka who was charged with evading ¥570 million in income tax for not declaring his winnings from horse races as income from 2006 to 2009.

Prosecutors said the defendant made ¥2.880 billion from the races after the cost of his winning betting slips was subtracted.

But presiding Judge Masaki Nishida ruled that his income was only ¥140 million because the cost of his losing slips should be considered a business expense as well.

“The defendant purchased betting slips on a continuous basis, and this can be considered not only leisure, but also a profit-making activity,” Nishida said.

Based on the finding, the judge determined that the defendant had thus evaded around ¥50 million in tax — less than a tenth of the ¥570 million in tax claimed by prosecutors —and gave him two months in prison, suspended for two years, noting the defendant “was aware of his filing requirement.”

Prosecutors had demanded a one-year prison term.

According to the indictment, the defendant spent around ¥2.870 billion on betting slips over the Internet from 2007 to 2009 and accumulated ¥3.010 billion in winnings.

The defendant, who initially pleaded not guilty, said he accepts the ruling and did not plan to appeal.